Jakarta. Jakarta Composite Index (JCI) jumped more than 1% on Friday morning as optimism from a global market rally offset concerns over rupiah weakness, sustained foreign capital outflows, and expectations of another Bank Indonesia rate increase.

JCI rose 74 points, or 1.2%, to trade between 5,952 and 5,980 shortly after the opening bell.

Within the first five minutes of trading, market volume reached 2 billion shares with turnover of Rp 1.57 trillion ($87 million) from more than 152,000 transactions. Advancers outnumbered decliners 418 to 90, while 167 stocks were unchanged.

Phintraco Sekuritas said the rupiah weakened 0.25% to Rp 17,989 per US dollar on Thursday, reinforcing market expectations that Bank Indonesia could deliver another interest rate hike at next week's policy meeting. “The JCI still has room to extend its gains today and test the 5,900-5,950 range,” Phintraco wrote in a research note.

The brokerage also highlighted the government's ongoing overhaul of the Free Meals program (MBG) aimed at improving budget efficiency through data synchronization and restructuring of service units.

The government previously reduced the program's budget allocation to Rp 268 trillion from an initial Rp 335 trillion. As of May 2026, MBG spending had reached Rp 88.15 trillion, up 17.53% from Rp 75 trillion in April.

“If MBG budget efficiency can be improved significantly, it could help reduce the state budget deficit,” Phintraco said.

However, the brokerage noted signs of weakening domestic consumption. Retail sales contracted 3.7% year-on-year in April after growing 3.4% in March, marking the first annual decline since April 2025 and underscoring pressure on consumer purchasing power following higher non-subsidized fuel prices.

“Retail sales also fell 11.6% month-on-month after increasing 10.3% in March. This was the steepest monthly decline since June 2022,” Phintraco said.

Meanwhile, Kiwoom Sekuritas Indonesia, through their research, noted that foreign investors booked a net sell of Rp 261 billion on Thursday, bringing cumulative net foreign outflows this year to around Rp 78.5 trillion.

“The continued foreign outflow shows that global investors remain cautious toward Indonesian assets amid elevated domestic and external uncertainties, including rupiah weakness, concerns over Indonesia's risk perception, and the ongoing ‘Sell Indonesia’ trend seen in recent months,” Kiwoom said.

The brokerage added that investors are also monitoring planned student demonstrations in Jakarta on Friday, which could further weigh on sentiment regarding Indonesia’s social and political stability.

“As long as these factors continue to overshadow the market, foreign capital flows are likely to remain selective and have yet to fully return to Indonesian equities,” Kiwoom said.

External sentiment improved after US President Donald Trump said the key terms of a peace agreement with Iran had been approved by all parties and could be signed soon. Trump also said the Strait of Hormuz would reopen and US naval restrictions on Iran would be lifted once the agreement takes effect.

Despite the optimism, tensions remained elevated as the US and Iran continued exchanging strikes through Thursday, keeping investors alert to potential disruptions to global energy supplies through the strategic waterway.

Wall Street posted its strongest rally in two months overnight after Trump withdrew a previous threat to bomb Iran, boosting hopes for a diplomatic resolution and a smoother flow of global oil supplies.

The S&P 500 surged 1.8%, while the Dow Jones Industrial Average jumped 929 points, or 1.9%. The Nasdaq Composite gained 2.5%.

Regional markets also advanced strongly on Friday morning. As of 9 a.m. Jakarta time, Japan’s Nikkei rose 3.25%, South Korea’s Kospi soared 6.71%, Hong Kong’s Hang Seng gained 1.47%, and China’s Shanghai Composite added 1.02%.